By LAWRENCE LEISURE 
When it comes to health care prices, the burden piled on payers can seem almost cartoonishly heavy. News stories on the state of the industry read as though some satirist decided to exaggerate real systemic flaws into cost-prohibitive fiction. A particularly painful example hit the presses earlier this year, when a writer for Reuters revealed that the cost of a full course of oncology treatment skyrocketed from $ 30,447 in 2006 to $ 161,141 in the last few years. The change was so unbelievable as to verge on dark comedy — but there isn’t much to find funny in the situation when lives and health outcomes are on the line.
For the average employee in my home of Silicon Valley, the price crunch is challenging regardless the size of your paycheck. For local employers, however, the dilemma can be even more pointed. Today, employees of companies, large and small, expect their employer to provide comprehensive health care benefits and are largely unaware of or insensitive to the factors exacerbating market problems today. Providing these benefits, however, is easier said than done.
Employers and insurers alike face a multitude of barriers to connecting employees with affordable care. Recent research suggests that prices will increase at an average clip of 5.8% annually between now and 2024, well above the expected rate of inflation. Even worse, the increased consolidation of healthcare providers has drastically undermined the negotiating power that payers would otherwise have in more competitive markets. In Northern California, for example, major health systems, including Sutter Health, sparked outrage and protest as they have managed to amass enough of the region’s hospitals, outpatient facilities, and primary care offices to diminish regional competitors and set what many view as unacceptably high rates — all the while knowing that the lack of local competition makes it challenging for the major health insurers to push back.
The deck is more than a little stacked against the payers and their employer customers when it comes to obtaining access to affordable and quality care. However, they both may have more cards to play than they believe. The large self-insured employers can overcome price barriers and regain greater control over runaway prices by balancing traditional methods of provider contracting with the assumption of more direct control of patient navigation and care delivery. The scope of employer involvement varies, but the type of intervention will generally fall into three categories: care navigation, narrow networks, and direct primary care.
Care Navigation
This method of patient/employee navigation is the most hands-off of the three and addresses the knowledge gap that the average worker faces when they search for providers. Finding a provider is often a grueling, time-consuming, and frustrating process. Individuals needing surgery, for example, might delight in locating an in-network doctor, only to find that said physician doesn’t have hospital privileges at the only in-network facility within easy driving distance.
Moreover, finding an in-network physician isn’t necessarily synonymous with finding an affordable or high-quality physician. Customers in health care are often forced to take what they can get, rather than encouraged to shop for what they need. Outside of any other market, this pressure to settle would be outrageous. As Francois de Brante, VP and director of the Center for Payment Innovation declared in an article for Modern Healthcare, “If you don’t know the price of the service that you are buying before you buy it and you don’t have the ability to compare that to others and determine the value of that purchase, then how is that a functional market? It’s completely dysfunctional.”
Care navigation tools take some of the pressure off of the patients by providing them with an organized way to access the information they need to make an informed decision. Castlight Health, for example, contracts with companies and provides a flexible health navigation platform that takes their benefit offerings into account. Individual employees can then use Castlight to compare medical service prices and providers and find those that mesh well with their medical needs and financial capabilities. The company invests little, but employees are better able to navigate their medical decisions and ultimately cost the payer less than if they were entering the market blindly.
Narrow Networks
Employers who embrace narrow networks take a more proactive approach to connect employees with high-quality and cost-effective physicians. Rather than passively providing individuals with tools to sort through an expansive field of providers, payers curate “narrow” networks of pre-selected providers. This approach limits the number of health care providers to a comparatively small handful, but it near-guarantees lower costs to the individual patients and the payer. With narrow networks, payers can steer enrollees to physicians cherry-picked for their quality and affordability and nip most coverage care gaps in the bud.
Currently, the private sector’s regard for curated or narrow networks is lackluster; however, some experts in the field think that the approach will gain popularity over the next few years. According to a recent report from the Employee Benefit Research Institute, over 30% of companies with more than 5,000 workers enrolled in a health plan currently offer access to alternative or “high-performance” care networks. Field researchers have also noted that despite the current low prevalence rates, there has been a steady increase in narrow network adoption by urban-based employers of all sizes.
Salt Lake City-based Imagine Health has been a pioneer in building high-performance networks for Fortune 500 companies. Their ability to offer employees of sponsoring companies enhanced benefits and lower contribution levels has resulted in employee participation levels as high as 50% while still driving material net savings for the employer.
More recently, we’ve seen the emergence of virtual narrow network companies like VIM. VIM has contracted with the Premera BCBS to launch one of the first such networks. In its partnership with Premera, VIM leverages a mobile interface to intercept and provide care options to patients. First, the service engages users by providing care options that are attractive for their quality, cost, and accessibility; then, it enables patients to book appointments at their convenience. As the VIM solution demonstrates, providing a complete, easy to use, end to end to user experience is key. Their solution provides the payer and employer with a much-needed tool to help their employers navigate towards higher-quality, lower-cost care experience.
Direct Primary Care
Direct care is the most hands-on of the routes listed here, requiring a great commitment of time and money from an employer. Companies that go this route offer employees direct access to established networks that are either built on a corporate campus (on-site) or nearby (near-site).
The idea of directly-provided care isn’t a new one. Company-owned clinics first emerged in the mid-nineteenth century, when railroad and mining companies realized that it would be more convenient and cost-effective to offer urgent care services on the premises than send workers away to receive care from a third party. Prior to World War 2, Henry Kaiser partnered with Sidney Garfield, MD to launch what is now Kaiser Permanente to provide care to employees of varied enterprises. Today, tech companies and other large corporations have taken a similar tack to providing comprehensive primary care options to their employees contracting with onsite and near-site players like Premise Health, Crossover Health, and One Medical. The benefits are mutual for employers and patients alike: the convenient location cuts down on the time employees need to spend away from their role, and the easy access to care enables workers to access primary care treatment at a more affordable price point.
That said, on-site care facilities aren’t feasible for smaller companies. One 2018 report on on-site care solutions estimated that a company could only support a campus health center if they already have between 500 and 700 centrally-located employees. Smaller companies or smaller locations of national employers might consider near-site care: a model where multiple companies share a health service hub. Crossover Health has launched several near sites in Silicon Valley. Similarly, One Medical, in addition to managing on-site clinics, is marketing its retail sites as a network of near-sites to employers seeking to provide an on-site-like experience. When implemented well, near-site solutions provide all of the benefits of on-site care at a lower investment and fosters a thriving regional healthcare community.
The challenge facing payers and their employer customers today is also an opportunity. Employers stand in a prime position to wrest power back from increasingly monopolistic health care networks and craft systems that both enhance employees’ abilities to navigate their options and empower them to find affordable, high-quality care. These new models have the potential to throw the health care industry into disruption — but sometimes, disruption is just what the market needs to break free from constricting patterns.